PSE Circular for Brokers No. 2404-98

October 20, 1998 PSE CIRCULAR FOR BROKERS NO. 2404-98 October 19, 1998 PHILIPPINE STOCK EXCHANGE, INC . Listing & Disclosure Group Philippine Stock Exchange Center, Exchange Road Ortigas Center, Pasig City Gentlemen : In reply to your fax message dated October 19, 1998 which was received by your office on the same day referring to the press release made in the Manila Bulletin captioned "Aboitiz Equity sees self as power utility", please consider this as our written disclosure on the foregoing matter: With the current regional economic crisis, obtaining financing for projects, whether in the form of equity or debt, has become difficult and expensive. As a result we have to be selective in the projects we undertake. The response of AEV has been to focus on its core business of power and financial services, which have also been the most consistent in terms of profit growth for the company. Part of the move to focus has actually been to dispose of some non-core holdings as an alternative way of raising cash, other than debt or equity deals. We have successfully done this in the case of both our Republic Cement and Pilipinas Kao holdings, both disclosed earlier this year, where we raised a combined amount of approximately 1.3 billion pesos. We have said in our shareholders' briefings earlier this year that we plan to review the status of our other non-core businesses. We are still doing that. Our financial services group remains a core holding, and we have infused additional capital through the capital calls of both Unionbank and City Savings Bank. Aside from covering the banks' capital requirements, our investments slightly increased our ownership share in both banks. There are no immediate prospects of additional investments in this sector. LLjur On the other hand, our power group has several projects in the pipeline, from competitive bids for NPC generation projects which our consortium won, and the potential of other business opportunities as the industry goes through deregulation. Therefore in the foreseeable future, we have mainly power projects to look forward to, and as a result, more of the company's assets and earnings will be in the power sector. Consequently, we expect the bulk of our earnings to come from power and financial services. We are and will continue to be a power and financial services company. Perhaps the impression gathered by the article's write was based on the number of recent and prospective power sector projects we have lined up. We trust this will serve as a full and clear explanation or disclosure of the news article referred to. But should you have any further questions, please do not hesitate to call us. cdll Thank you. Very Truly Yours, ABOITIZ EQUITY VENTURES, INC. By: SGD.) SYLVA A. PADERANGA Assistant Corporate Secretary